Owens-Illinois Glass Co. v. Oxford, OWENS-ILLINOIS

• Decision Date: 08 September 1960
• Docket Number: OWENS-ILLINOIS,No. 20960,20960
• Citation: 216 Ga. 316,116 S.E.2d 293
• Parties: GLASS CO. v. Dixon OXFORD, Commissioner of Revenue.
• Court: Georgia Supreme Court

Page 293

116 S.E.2d 293

216 Ga. 316

OWENS-ILLINOIS GLASS CO. v. Dixon OXFORD, Commissioner of Revenue.

No. 20960.

Supreme Court of Georgia.

Sept. 8, 1960.

Rehearing Denied Sept. 21, 1960.

Syllabus by the Court

This State's income-tax statute of 1931 as finally amended by the act of 1950. under which the taxes here involved were assessed and collected, does not offend the due-process clause of Georgia's Constitution of 1945, since such amended statute levies a tax only on that portion of the corporate taxpayer's net income which arises from activities or transactions it carries on within this State for the purpose of financial profit or gain, and since such activities or transactions form a sufficient 'nexus' to satisfy the due-process requirements.

The plaintiff (Owens-Illinois Glass Company, a foreign corporation) instituted this litigation against the defendant, as Revenue Commissioner of the State of Georgia, to recover $39,119.55 alleged to have been erroneously or illegally collected from it by the defendant as income taxes for the calendar years 1949, 1950 and 1951 under the following Georgia income-tax statutes: Code (Ann.) § 92-3102, which provides that 'Every domestic corporation and every foreign corporation shall pay annually an income tax equivalent to four per cent. of the net income from property owned or from business done in Georgia, as is defined in section 92-3113'; and Code (Ann.) § 92-3113, which declares in part that 'The tax imposed by this law shall apply to the entire net income, as herein defined, received by every corporation, foreign or domestic, owning property or doing business in this State. Every such corporation shall be deemed to be doing business within this State if it engages within this State in any activities or transactions for the purpose of financial profit or gain, whether or not such corporation qualifies to do business in this State and whether or not it maintains an office or place of business within this State, and whether or not any such activity or transaction is connected with interstate or foreign commerce.'

The petition in substance alleges that the plaintiff's home office or principal place of business was, during each of the taxing years involved, located in Toledo, Ohio; that all orders received for its products were accepted at its home office in Toledo; that it shipped all products sold to customers in this State by common carrier f. o. b. its plant or warehouses outside this State; that its customers remitted all payments for products purchased from it directly to it at its Toledo office; and that title to all products sold by it to Georgia purchasers passed to and vested in them on the company's delivery of such products to common carriers at points outside of Georgia. The petition further alleges that the last quoted sentence of Code (Ann.) § 92-3113, which was added thereto by an amendment approved on February 16, 1950 (Ga.L.1950, p. 299, 300) offends article 1, section 1, paragraph 3 of Georgia's Constitution of 1945 (Code, Ann. § 2-103), which declares that 'No person shall be deprived of life, liberty, or property, except by due process of law.' The facts were stipulated and by agreement no other evidence was introduced. The parties submitted the case to the trial judge without a jury, and to a judgment upholding the validity of the attacked statute and the tax imposed and collected, the plaintiff excepted and by direct bill of exceptions brought the case to this court for review.

From the stipulation of facts it appears that, on December 2, 1952, the State Revenue Commissioner of Georgia collected from the plaintiff (Owens-Illinois Glass Company) the amount sued for in this litigation, which the State claimed the company was due it for the calendar years 1949, 1950, and 1951. On November 28, 1955, the company filed with the commissioner its claim for a refund of the amount collected and here sued for and such claim was denied by him on or about January 13, 1956. Such income taxes were ascertained and computed from the company's returns for the three years involved by using the formula set out in Code, § 92-3113(4). The correctness of the company's returns, the amount of its net income for each of the taxing years, the apportionments made on the basis of the company's returns, and the amount of taxes paid, including interest, are not disputed; but the company denies any liability to the State of Georgia for any amount of income taxes for the years involved or any one of them. During such years, the company maintained its Southeastern Regional Office and also a branch office in Atlanta, which were operated as a single office employing 10 fulltime employees (1 regional manager, 1 branch manager, 3 branch sales representatives, and 5 secretary-stenographers). The company's southeastern region consisted of North Carolina, South Carolina, Georgia, Florida, Alabama, Tennessee, Arkansas, and parts of Mississippi, Kentucky, Missouri and Illinois. Its southeastern regional office for the taxing period involved was in charge of and directed by a manager, who also supervised the work of the branch offices of the company's southeastern region and the sales representatives employed in such branch offices. The company's regional office and its branch office in Atlanta consisted of approximately 2,000 square feet of leased office space. During the taxing period involved, competition in such region was such that it was important for and advantageous to the company to have sales representatives out in the field and for them to be in close and constant contact with its customers as well as with prospective customers. Purchase orders for the company's products were regularly and systematically solicited from customers and prospective customers located within Georgia by the company's sales representatives and they regularly and systematically called on customers and prospective customers to solicit orders and convince them of the superiority of the company's products, check their needs for its products, express appreciation for past patronage, encourage future orders, and otherwise promote good will between such customers, as well as prospective customers, and the company. Orders were also received at the company's Atlanta branch office from these customers by mail. All purchase orders from customers located in Georgia, whether received from personal solicitation or by mail, were sent to the company's Atlanta branch office initially. The company maintained and operated no manufacturing plant, werehouse, stock of goods, or storage rooms during said years at any place in Georgia. When a customer's purchase order was received at the company's Atlanta branch office, it was there translated and transcribed, from the customer's purchase order to a form prescribed by the company into terms, specifications, and language consistent with and used in the company's policies and practices. Where a customer's purchase order was a repeat order, the matter or translating and transcribing it was more or less a matter of copying the translation and transcription of a prior order, but where it was a new order, such as new or different designs, prices, sizes, weights, terms, delivery dates, etc., the translation and transcription usually required the judgment and experience of the branch manager and branch sales representative handling the account, and each branch office was at all times in direct telephone and teletype communication with the company's home office in Toledo, and decisions on production capabilities, scheduling, delivery dates, etc., were tentatively determined by means of this, or other, direct communication at the time a customer's purchase order was being translated and transcribed on the company's order form. All customers' orders were received by the company's regional or branch managers or branch sales representatives subject to acceptance at the company's home office in Toledo; no regional or branch manager or branch sales representative at any office had any authority to, or did, accept a customer's order under any circumstances. All credit decisions were made at the company's home office in Toledo, and no regional or branch manager or branch sales representative of the company had any authority to, or did, accept a customer's order under any circumstances. All credit decisions were also made at the company's home office in Toledo. After a customer's order had been translated and transcribed, an 'Order Acknowledgment' was mailed from the branch office to the customer, containing in part the following: '* * * Unless you advise this Branch Office to the contrary immediately this order is to be considered correct. This order shall not be binding upon this company until approved and accepted by it at its General Office in Toledo,...